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Financial Market Supervisory Authority Of The Republic Of Azerbaijan

Charter

                                                                                                                      “APPROVED by”
The Decree number 828 of the
President of the Republic of
Azerbaijan on March "10", 2016

                                                                                                                                                                                                 

 

CHARTER

OF FINANCIAL MARKET SUPERVISORY AUTHORITY OF

THE REPUBLIC OF AZERBAIJAN

 

1. General Provisions

1.1. Financial Market Supervisory Authority of the Republic of Azerbaijan (hereinafter as - FIMSA) is founded by the Decree # 760 on "Foundation of the Financial Market Supervisory Authority of the Republic of Azerbaijan public legal entity” of the President of the Republic of Azerbaijan on February 3, 2016 for the purpose of licensing, regulation and control of the securities market, investment funds, insurance, credit organizations (bank, none-bank organization and operator of the postal service) and payment service fields; the legalization of money funds or other property gained via criminal way and improvement of the control system to prevent financing of terrorism; and to provide the clarity and speed of a control system over the above-mentioned fields (hereinafter as — financial markets).

1.2. FIMSA is independent in its activities and guided by the Constitution of the Republic of Azerbaijan, international contracts supported by the Republic of Azerbaijan, the Law on "Public legally entities" of the Republic of Azerbaijan, other relevant laws of the Republic of Azerbaijan, the decrees and orders of the President of the Republic of Azerbaijan, the decrees and orders of the Cabinet of Ministers of the Republic of Azerbaijan, other normative legal acts and this Charter.

1.3. FIMSA cannot be engaged in business activity. It is not a profit-making entity. Any funds (profits) earned by the actions of FIMSA is to be re-invested in the organization.

1.4. FIMSA is public legal entity and is engaged in the fields determined by the Charter.

1.5. FIMSA has tax concessions provided by the Tax Code of the Republic of Azerbaijan.

1.6. FIMSA has an independent balance, property at its disposal, accounts and safety deposit boxes in banks including the Central Bank of the Republic of Azerbaijan, plus seal, corresponding stamp and official forms.

1.7. T. FIMSA is based in Baku city.

2. Purpose and directions of FIMSA actions

2.1. The main purpose of FIMSA is to provide effective oversight and stability for the financial markets of the Republic of Azerbaijan, to protect the rights of creditors, insured persons, investors and other consumers of financial markets. FIMSA is based on leading international principles and standards in the field of regulation of financial markets.

2.2. Strategic objectives of FIMSA are as follows:

2.2.1. Participation in the formation of policy in the financial markets and implementation of this policy;

2.2.2. Macro-prudential control;

2.2.3. Participation in the preparation of the drafts of relevant legal and normative acts related to the regulation of the financial markets;

2.2.4. Licensing activity in the financial markets, authorization and liquidation;

2.2.5. Realization of steady and comprehensive control in the financial markets, carrying out inspections and empowering third parties to carry out inspection, maintaining records;

2.2.6. ensuring supervision over prevention of legalization of criminally obtained funds or other property and financing of terrorism, coordinating the activity of monitoring entities, other persons involved in monitoring, supervision and other state authorities, collecting and analyzing of the information received from them;

2.2.7. Provision of control system in the field of savings insurance;

2.2.8. Provision of the use of unit information system in financial markets.

3. Rights and duties of FIMSA

3.1. FIMSA exercises the powers of a control body and financial monitoring body according to the laws of the Republic of Azerbaijan on "Banks", "Non-banking organizations", "Credit Unions", "Postal service", "Insurance activity", "Compulsory insurance", "Securities Market", "Investment funds", "Lotteries", "Regulation of currency", "Savings Insurance", "Legalization of cash funds or other property criminally gained and fight against financing terrorism" and other normative legal acts.

3.2. FIMSA fulfills the following duties alongside those indicated in item 3.1 of the Charter:

3.2.1. FIMSA determines and organizes stress-tests at the organisations under its control, controlled subjects, analyzes system risks in financial markets, analyzes stress-tests and scenarios and determines and analyzes the objectives of the financial markets on the basis of these analyses;

3.2.2. Application of impact activities in relation to controlled subjects of FIMSA;

3.2.3. Prepares plan of action in the field of normalizing controlled subjects of FIMSA;

3.2.4. Determines corporative management standards in the controlled subjects of FIMSA and ensures their practice;

3.2.5. Determines the rules for ordering and selling of excise stamps, including maintenance of records and ensures their practice;

3.2.6. Defends the rights of consumers and investors in the financial markets;

3.2.7. Prepares proposals on the direction of development in financial markets;

3.2.8. Coordinates the action of State bodies in the financial markets;

3.2.9. Participates in the implementation of international contracts supported by the Republic of Azerbaijan, creates international relationships and coordination, participates in the preparation of international projects in connection with the action of FIMSA, organizes international conferences, seminars and other international events and participates in their action;

3.2.10. Takes appropriate measures to protect State and commercial secrets;

3.2.11. Raises public awareness in connection with its activity, creates website for placing of public information and explanations developed by FIMSA, as well as the public information which is legally determined to be placed on the website and updating of the information;

3.2.12. Promotion of financial markets and instruments, raises public awareness in the field of financial markets and investments;

3.2.13. Takes actions to improve its structure and activity;

3.2.14. Looks through the appeals in connection with its activity;

3.2.15. Fulfills other duties determined by the law and the decrees of the President of the Republic of Azerbaijan.

3.3. FIMSA fulfills the following duties alongside those indicated in item 3.1 of the Charter:

3.3.1. Participates and makes proposals in the process of development of legal acts which regulate financial markets;

.3.2.  May submit written inquiries to State and local self-government bodies as well as physical and legal entities controlled by FIMSA to attain necessary information (documents);

3.3.3. Collaborates with international organizations, competent State bodies (organizations) and central banks of foreign countries to learn corresponding practice of foreign countries;

3.3.4. Invites independent experts and specialists to its action;

3.3.5. Prints special bulletins and other publications;

3.3.6. Learns about progressive practice in financial markets;

3.3.7. Carries out research in financial markets, prepares analytical and methodical materials;

3.3.8. Carries out the rights determined by law and acts of the President of the Republic of Azerbaijan.

4. Management of FIMSA

4.1 Board of Directors and Management Board are the governing bodies of FIMSA.

4.2. In its activities and management, FIMSA applies progressive corporate governance standards.

4.3. Citizens of the Republic of Azerbaijan with higher education in the field of Economics and Law, professional experience in financial and banking sectors, without any criminal convictions, and without any liability to foreign countries may become a member of the Board of Directors and the Board.

4.4. Members of the Board of Directors and Management Board, as well as other officials of FIMSA may not engage in other paid employment and entrepreneurship activities except for scientific, pedagogical and creative activities during the term of office. Members of the Board of Directors and the Management Board, as well as other officials of FIMSA cannot take a position in other governing bodies of legal entities.

4.5. Members of the Board of Directors and the Management Board, their relatives, and all other officials of FIMSA may not own any significant share in the legal entities supervised by FIMSA and thereby have no interest in generating income out of their operation.

4.6. Members of the Board of Directors and the Management Board, and other officials of FIMSA may not become members and take office in political parties and public unions.

4.7. Any member not meeting the requirements for membership in the Board of Directors Management Board must resign. Members of the Board of Directors and Management Board should notify the Secretary of the Board of Directors on existing and potential cases causing conflicts of interest and discrepancy in order to provide the internal audit division of FIMSA.

5. Board of Directors

5.1. The Board of Directors supervises and verifies the activities of FIMSA and the Management Board. The Board of Directors is composed of 5 members, including Chairman and Deputy Chairman. The Chairman of the Board of Directors, its Deputy and other members are appointed and dismissed by the President of the Republic of Azerbaijan. Term of office of the Board of Directors is 5 years.

5.2. The Board of Directors adopts decisions independently.

5.3. The Board of Directors carries out the following functions:

5.3.1. Determines strategic goals and plans of FIMSA and informs the President of the Republic of Azerbaijan about these matters;

5.3.2. Confirms statutory enactments, including economic regulation guidelines (prudential);

5.3.3. Should Chief Executive Officer of FIMSA not meet the requirements for membership of the Management Board, the president of the Republic of Azerbaijan will be informed;

5.3.4. Except for Chief Executive Officer of FIMSA, the Board appoints and dismisses its deputies and other members of the Management Board;

5.3.5 Establishes the procedures for hiring at FIMSA and development of procedures.

5.3.6 Ascertains the form and amount of remuneration at FIMSA in the manner prescribed by section 13 of this Charter, taking into account relevant wage level in the financial and capital market of the Republic of Azerbaijan;

5.3.7 Reviews the appeals issued by the members of the Board of Directors and the Management Board, and adopts a decision;

5.3.8. Supervises the activities of the Management Board and verifies its activities;

5.3.9. Defines the terms and conditions for excluding conflicts of interest during activities of the Board of Directors, executive structures and employees of FIMSA, and supervises their execution;

5.3.10. Acts as decision-maker regarding approval of domestic rules, administrative procedures, as well as regulations and charters (excluding subsidiary public legal entities) of structural sections, bodies included into the structure and subordinated organizations (of legal entities, organizations etc.);

5.3.11. Supervises the activities of internal audit division of FIMSA and receives action reports, appoints and dismisses its members;

5.3.12. Appoints an external auditor of FIMSA and accepts audit report;

5.3.13. Approves financial planning and budget of FIMSA;

5.3.14. Develops financial statement and action report of FIMSA and submits to the President of the Republic of Azerbaijan;

5.3.15. Submits annual report to the President of the Republic of Azerbaijan by March 31, regarding the state of and development prospects in the financial markets of the country in previous years.

5.3.16. Discloses a report on FIMSA's activities to the public;

5.3.17. Defines the procedure for formation and use of capital funds of FIMSA;

5.3.18. Confirms staff schedule and cost estimate within the approved budget pursuant to the section 13 of the Charter;

5.3.19. Determines the amount of fees of entities controlled by FIMSA and the procedure for payment of fees;

5.3.20. Adopts appropriate decisions on licensing and permits in the financial markets in circumstances provided by the legislation;

5.3.21. Appoints interim administrator in the entities supervised by FIMSA and makes a decision related to the termination of powers;

5.3.22 Appoints and dismisses Secretary of the Board of Directors;

5.3.23. Adopts a decision on the following issues for activities of FIMSA;

1. Systematic issues significantly impacting on the financial markets and observed in one or several entities supervised by FIMSA;

2. Issues of particular importance for public;

3. Issues bearing higher liability risk for FIMSA and affecting the reputation of FIMSA;

4. Issues raised by any member of the Board of Directors;

5.4. Any member of the Board of Directors is entitled to send information request on all the matters, complying with the requirements of sub-item 5.3.9 of the Charter.

5.5. The Board of Directors reports to the President of the Republic of Azerbaijan according to item 5.3.14 of the Charter every 6 months.

6. Procedure for meetings of the Board of Directors

6.1. The meetings of the Board of Directors are chaired by the Chairman of the Board of Directors or, in his absence, the Deputy Chairman.

6.2. Meetings of the Board of Directors may be convened at the request of any member of the Board of Directors or Chief Executive Officer.

6.3. Chairman of the Board of Directors determines the issues to be discussed through consultation with Chief Executive Officer and prepares the agenda of the meeting. Each regulation of the meeting shall be defined by the Board of Directors, subject to the issues to be discussed.

6.4. Written notice on the place and time of meeting, plus agenda items shall be provided to the members of the Board of Directors by attachment of necessary documents at least 3 business days before the meeting.

6.5. Chief Executive Officer attends the meetings of the Board of Directors. Members of the Management Board participate in meetings of the Board at the initiative of Chairman of the Board of Directors and Deputy Chairman.

6.6 Chairman of the Board of Directors may, at his initiative or at the request of any member of the Board and Chief Executive Officer, invite other persons to participate in the Board's meeting.

6.7. Decisions of the Board of Directors are adopted by open voting, a simple majority of votes of members attending the meeting. If votes are equal, the vote of the person chairing the meeting shall be decisive.

6.8. If a question touching upon the interest of any member of the Board of Directors is raised in the agenda, the member should give detailed information about interests related to this matter and not participate in the discussion of this issue. In this case, such member shall not participate in the meeting and, while determining a quorum, his participation shall not be taken into account.

6.9. Decisions should not be made on issues not included in the agenda and without relevant documents submitted prior to the meeting, except with consent from all participating members.

6.10. The outcomes of Board meeting should be reflected in minutes and signed by both members of Board of directors and Secretary of Board of Directors. Should the secretary of the Board of Directors not attend the Board's meeting, the Chairman of the Board of Directors shall appoint a substitute. Minutes shall be approved by the Board of Directors and sent to the Management Board.

6.11. Secretary of the Board of Directors shall be appointed by the Chairman of the Board of Directors from amongst the employees who are not members of the Board of Directors.  Secretary is reporting to the Chairman of the Board of Directors.

6.12. Secretary of the Board of Directors:

6.12.1 Organizes the meetings of the Board;

6.12.2 Provides written notice on the time of Board meetings to the members of the Board as well as persons specified in items 6.5 and 6.6 of the Charter at least 3 business days prior to the meeting.

6.12.3 Prepares minutes of the Board meetings and submits to the members of the Board for signing.

6.12.4. Prepares drafts of the Board decisions, submits to the Chairman of the Board of Directors for review and signing.

6.12.5. Informs about decisions adopted by the Board in an appropriate manner.

7. Management Board

7.1.      Management Board consists of Chief Executive Director, two deputies and six members. Chief Executive Director may be assigned to and dismissed from the position by the President of the Republic of Azerbaijan for a period of 5 years. Deputies of Executive Director and other members of the Management Board are assigned and dismissed from the position by the Board of Directors by recommendation of Chief Executive Director. Members of Management Board are assigned to position for 5 years.

7.2. Management Board of FIMSA realizes following duties:

7.2.1 Executes the decisions of Board of Directors

7.2.2. Prepares information on the matters concerning the authority of Board of Directors about making of decision and submits to the Board of Directors and reports to Board of Directors.

7.2.3. Applies corresponding management and control systems and reports to Board of Directors about efficiency of such systems

7.2.4. Prepares offers in connection with matters indicated in sub-items 5.3.9 and 5.3.10 of this charter and submits to Board of Directors for confirmation.

7.2.5. Makes decision on all other matters not concerning the duties of Board of Directors or internal audit division of FIMSA.

7.2.6. Informs Board of Directors on current and operative matters.

7.3. Chief Executive Director realizes following duties:

7.3.1. Management of current activity of FIMSA;

7.3.2. Gives orders in connection with the activity of FIMSA in the frame of its authority and participates in decision-making;

7.3.3. Reports to the Board of Directors upon appointment and dismissal of the Deputies of Chief Executive Director and other members of the Management Board;

7.3.4. Creates the advisory committee and group of employees upon direction of FIMSA activity;

7.3.5. submits reports on FIMSA activity to the Board of Directors;

7.3.6. Prepares offers in connection with appointment, re-appointment and dismissal of employees (except members of internal audit department) and the motivation and censure actions toward employees in accordance with sub-item 5.3.5 of this charter.

8. Internal audit section of FIMSA

8.1. Internal audit section of FIMSA is subject to and reports to the Board of Directors. The members of internal audit section of FIMSA may be appointed and dismissed by the Board of Directors. Internal audit section has a right to access information, to access documents and database. The members of internal audit section shall constitute working staff of FIMSA and shall observe all rules pertaining to all members of FIMSA.

8.2. Internal audit section:

8.2.1. Designs risk-based annual audit plan and submits them for approval by the Board of Directors;

8.2.2. Attains high quality audit operations by meeting national and international standards for stable professional development;

8.2.3. Supports FIMSA in aiming to attain its purposes through applying systemized and realistic approach to evaluate risk management, internal management and control systems, management process and contributes to their development;

8.2.4. Audits structural divisions of FIMSA and matches correspondence to legal, regulatory and other rules;

8.2.5. Certifies authenticity of documents, reports and other data in FIMSA;

8.2.6. Submits report to the Board of Directors about regular audit results;

8.2.7. If any special important cases are observed, gives notice to the Board of Directors;

8.2.8. Allows structures and persons named in the report to give opinion before submitting the same to the Board of Directors;

8.2.9. Makes recommendations for resolving obvious weaknesses to the Board of Directors and structural divisions of FIMSA during audit;

8.2.10. Carries out other authorities designated by the Board of Directors.

9. Authority to sign

9.1. FIMSA shall apply joint signature principle of two signatories in its activity.

9.2. The Chairman of Board of Directors, or in his absence, Deputy Chair and ChiefExecutive Director or a specified member of Management Board shall sign Charter of the Board of Directors (excluding other statutory acts), letters to the President of the Republic of Azerbaijan, State authorities and other government bodies.

9.3. The Chairman of the Board of Directors shall sign statutory acts of FIMSA.

9.4. Chief Executive Director, or in his absence, one Deputy and a specified member of Management Board shall sign all documents about current operation of FIMSA.

10. Charter Fund

Charter Fund of FIMSA is 5.000.000 (five million) AZN.

11. Sources of FIMSA property, basis of financial operations

11.1. FIMSA property shall be created from charter fund payable by the founder, from other property issued by the founder, from fees reimbursed by persons managed by FIMSA and from other legal assets.

11.2. Any rights for possession and disposal over FIMSA property belong to FIMSA. Independent financial assets of FIMSA are saved in State Treasury Agency of the Republic of Azerbaijan.

11.3. FIMSA shall use this property according to purposes of this Charter.

Government is not taking any responsibility for obligations of FIMSA and FIMSA shall bear risks at the rate of its property value for any possible damages.

12. Manner of management and coverage

12.1 FIMSA shall be managed by President of the Republic of Azerbaijan.

12.2. Any report or financial statements referring to operations of FIMSA shall be submitted by the Board of Directors to the President of the Republic of Azerbaijan.

12.3. FIMSA shall submit an annual report regarding the situation in financial markets for the previous year and current development prospects for the year ahead by (or until) 31 March to the President of the Republic of Azerbaijan.

13. FIMSA structure, staff units and employee compensation

FIMSA structure, total number of staff units and employee compensation shall be subject to agreement with President of the Republic of Azerbaijan.